Agenda item

The Council’s reporting procedures required it to present the annual Treasury Management stewardship report under regulations issued under the Local Government Act 2003 and covered the treasury management activities and the actual prudential and treasury indicators for 2019/20.

Decision

That the Annual Treasury Management Report for 2019/20 be approved and the actual prudential indicators contained within Appendices A and B be recommended to Council for approval.

None.

During 2019/20, the Council complied with its legislative and regulatory requirements. The key prudential indicators for the year, with comparators, could be seen in paragraph two of the report, with full details of transactions in year and performance against the Prudential Indicators included at paragraph four and Appendices A and B of the report.

Recent changes in the regulatory environment placed a much greater onus on members for the review and scrutiny of treasury management policy and activities.  This report was important in that respect, as it provided details of the outturn position for treasury activities and highlighted compliance with the Council’s policies previously approved by members. 

In compliance with the Prudential Code for treasury management reports were scrutinised by Performance Scrutiny Committee and reviewed by the Executive prior to reporting to full Council if required. Member training for the Performance Scrutiny and Audit Committees was undertaken on 21st November 2019 and 20^th February 2020 in order to support their roles in scrutinising the treasury management strategy and policies.

The Chief Finance Officer had confirmed that borrowing was only undertaken for a capital purpose and that the statutory borrowing limit and the authorised limit were not breached.

Additional borrowing of £5m was taken in 2019/20.

At 31^st March 2020, the principal value of the Council’s external debt was £120.153m (£115.354m at 31^st March 2019) and that of its investments was £30.5m (£29.2m at 31^st March 2019).

The financial year 2019/20 continued the challenging environment of previous years; low investment returns and continuing counterparty risk were the main features.

Key issues of activity during 2019/20 were noted as follows:

·         The Council’s total debt (including leases and lease-type arrangements) at 31^st March 2019 was £120.258m (Appendix A section 4.4) compared with the Capital Financing Requirement of £130.736m (Appendix A section 3.5). This represented an under-borrowing position of £10.478m, which was currently being supported by internal resources. Additional long-term borrowing would be taken in future years to bring levels up to the Capital Financing Requirement, subject to liquidity requirements, if preferential interest rates were available.

·         The Council’s Investments at the 31^st March 2020 were £30.55m (Appendix A section 4.3), which was £1.35m higher than at 31^st March 2019.  Average investment balances for 2019/20 were £28.833m, which was higher than estimated balances of £24.1m in the Medium Term Financial Strategy 2019-24 due to the timing of borrowing taken. It should be noted that this referred to the principal amounts of investments held, whereas the investment values included in the balance sheet were based on fair value. In most cases, this would simply be equal to the principal invested, unless the investment had been impaired. 

·         Actual investment interest earned on balances was £240k compared to £125k estimated in the Medium Term Financial Strategy 2019-24 (Appendix A section 10.2). 

·         The interest rate achieved on investments was 0.84% which was 0.31% above the target average 7-day LIBID rate (for 2019/20 the average was 0.53%).